Prudential launches new equity bond

By Paul Farrow

12:01AM BST 23 May 2001

PRUDENTIAL is targeting investors troubled by stock-market volatility and falling interest rates with a new guaranteed equity bond, due to be launched on May 29.

The new six-year bond, which is tied to the fortunes of the FTSE 100 index while guaranteeing no loss of initial capital, is the latest in a long line of similar launches taking advantage of the prevailing mood of caution among investors.

According to research from Threadneedle, the fund management group, one in three investors expects the stock market to fall further in the short-term, compared to one in five in a similar survey last November.

But the research also found that most investors are not planning to sell existing holdings. More than two thirds said they intended to hold on to their investments for the foreseeable future.

The Pru's single-premium bond guarantees to pay back the capital at the end of its six-year term, plus up to 15 per cent in each of the six years, depending on how the FTSE performs.